Egyptian shipowner fined $7.25 million in pollution case

Cairo, Egypt, headquartered National Navigation Company (NNC) pleaded guilty and was sentenced today in U.S. District Court for the District of Oregon for 15 felony charges, the Justice Department announced. The company admitted to violating the Act to Prevent Pollution from Ships and making false statements to federal officials.

The case arose from an investigation of a bulk cargo vessel named the M/V Wadi Al Arish. U.S. Coast Guard inspectors found evidence of illegal dumping of waste oil during a routine inspection in November 2007. Law enforcement agents from the Coast Guard and Environmental Protection Agency (EPA) launched a fleet-wide investigation, boarding vessels and interviewing dozens of crew members at multiple ports in the Pacific Northwest and along the Gulf Coast.

The investigation uncovered evidence of violations aboard six vessels in NNC's fleet. Crews on these vessels dumped thousands of gallons of waste oil, including sludge, in oceans around the world and falsified official ship records, including the Oil Record Book, a required log, to cover up the dumping.

The multi-district prosecution was initiated in Oregon and also included charges filed in Seattle and New Orleans that were consolidated in Oregon.

At today's hearing in Oregon, NNC pleaded guilty to one felony count from the Eastern District of Louisiana, two felony counts from the Western District of Washington and twelve felony counts in Oregon. The charges stem from dates that the six vessels visited ports in each of these jurisdictions.

The court sentenced NNC to pay a total monetary penalty of $7.25 million--the largest ever for a case involving the falsification of ship logs to conceal deliberate pollution from ships in the Pacific Northwest. Of this amount, a total of $2,025,000 will fund various environmental projects in Oregon administered by the National Fish and Wildlife Fund (NFWF) through the Oregon Governor's Fund for the Environment. Washington State will receive $350,000 through the NFWF administered Puget Sound Marine Conservation Fund. Louisiana will receive $175,000 through the NFWF administered Vessel Source Pollution Prevention and Compliance Fund.

According to the terms of the plea agreement, NNC is also subject to a four-year term of probation during which it must develop, fund and implement a stringent fleet-wide environmental compliance program approved by the United States that includes a court-appointed monitor and outside independent auditing of NNC ships. The plan will also apply to any ships that come under the ownership of NNC.

The criminal investigation began on Nov. 19, 2007, when the Coast Guard found substantial evidence of illegal ocean discharges of sludge and oily bilge water during an inspection conducted at the Dreyfus Grain Terminal on the Willamette River near the Rose Garden in Portland, Ore. Investigators ultimately learned that crews had illegally discharged oily sludge and oily bilge waste since at least 1999 and continued until the government's investigation in November 2007. Oily sludge was discharged using a bypass hose, connected to the sludge pump and overboard valve--which was then used to discharge the ship's sludge from a waste oil tank directly into the ocean. Bilge waste was also discharged illegally.

The vessel's Oil Record Book was deliberately falsified to hide the dumping. Eventually, the government determined that similar conduct occurred aboard at least five other vessels in the NNC fleet which had called at U.S. ports.

According to papers filed in court, prosecutors did not seek higher penalties because of NNC's substantial cooperation with the investigation and swift acceptance of responsibility for the criminal violations.

The case in Oregon was prosecuted by Assistant U.S. Attorney Dwight C. Holton and Trial Attorney J. Ronald Sutcliffe of the Justice Department's Environmental Crimes Section. Assistant U.S. Attorney James Oseterle prosecuted the case for the Western District of Washington and Assistant U.S. Attorney Dorothy Manning Taylor prosecuted the Eastern District of Louisiana case.